Traders’ verdict on VAT rise to 20%

The introduction of a 2.5 per cent increase in VAT has prompted a mixed response from Wokingham traders.

In an effort to boost tax revenues and the economy, the VAT on a wide range of goods and items went from 17.5 per cent to an all-time high of 20 per cent at midnight on Tuesday.

Shoppers across Wokingham and beyond can now expect a price increase on items such as televisions, computers and conservatories.

Necessities such as food, children’s clothing, newspapers and magazines, however, are exempt from the rise.

Retailers across the borough who spoke to The Wokingham Times say they expect trading patterns to be affected in the initial aftermath of the change.

They do, though, expect shoppers to start splashing the cash once they become accustomed to the rise and the prices they are expected to pay for the items which carry VAT.

Gary Colbert Owen, who runs Kaanaanmaa jewellers in Denmark Street, said: “Initially I think it will disrupt trade because people are not going to be happy about it, but I’m sure in time they will deal with it.

“I understand why it has got to be done, but nobody is ever going to be happy about having to pay more for things.”

Mike Holmes, of Wokingham Photographic in Denmark Street, said: “I honestly don’t know what is going to happen and I have completely mixed feelings on it.

“Initially, any increase in VAT is going to be detrimental to business, probably more so on the higher ticket items, but it might not have such an impact on the lower ticket items.

“It all depends on what you are going to spend your money on.

“If you are going to buy a new kitchen then yes, it is going to be a bit more expensive, but something smaller I doubt it will make much of a difference.

“Unfortunately it seems to be necessary [the increase] if you listen to all the pundits. I would rather have this happen then see an increase on personal taxes.”

A spokesman for Futurehome in Oaklands Park dismissed suggestions the rise will put people off buying luxuries such as flat screen televisions and home cinemas.

However, he added: “Any price increase is unwelcome and such a rise was probably inevitable.

“I don’t see people having problems with it as most of the increase is likely to be absorbed.”

Another sector which could be affected by the increase is leisure and entertainment, and in particular the pub.

However, Ralph Fletcher, who is assistant manager at the Broad Street Tavern, sees things differently.

He said: “I don’t think it will have an affect.

“It always goes quiet at this time of year anyway.

“At the end of the day people have this alarmist attitude because they think VAT is rising by 20 per cent, when in fact is it only going up 2.5 per cent.

“People are likely to be wary of the increase in the first place, but I cannot see it making that much of a difference.”

Mark Ashwell, who is proprietor of TradeMark Windows in Fishponds Road and chairman of Wokingham Chamber of Commerce, described the rise as “probably the fairest taxation”.

He explained how his company saw a pre-Christmas sales boom with customers looking to purchase windows and conservatories ahead of the increase, but expected purchasing to pick up again soon.

He said: “I don’t think it will cause that many problems in what is going to be a tough year anyway.

“I cannot see 2.5 per cent causing an awful lot of problems.

“It is going to give more aggro to retailers if anything, because they have got to change their prices.